HomeMy WebLinkAboutA017 - Escrow AgreementAmes/419370-27/F-scrow Agr
ESCROW AGREEMENT
THIS ESCROW AGREEMENT, dated as of October 15, 2002 (the Agreement"),
between the City of Ames, Iowa (the "Issuer"), and First American Bank, Urbandale, Iowa, as
Escrow Agent for the Refunded Bonds hereinafter described (the "Agent");
W I T N E S S ET H:
WHEREAS, the City of Ames, Iowa (the "City"), has heretofore determined to advance
refund certain outstanding bonds of the City, as follows:
Name of Issue
Dated Amount to be Refunded
General Obligation Corporate Purpose Bonds,
Series 1994B 10/01/94 $ 660,000
General Obligation Corporate Purpose Bonds,
Series 1995A 05/01/95 $5,030,000
General Obligation Corporate Purpose Bonds,
Series 1995B 10/01/95 $1,400,000
totaling $7,440,000 (collectively, the "Refunded Bonds"), scheduled to mature on and after June
1, 2003, $6,205,000 of which (the "Optional Bonds") are optional for prior redemption on June
1, 2003 (the "Redemption Date"), upon terms of par and accrued interest; and
WHEREAS, the Issuer has determined to issue its $7,580,000 General Obligation
Refunding Bonds, Series 2002C, dated October 1, 2002 (the "Series 2002C Bonds"), in order to:
(1) pay the costs of issuance of the Series 2002C Bonds; (2) pay interest on and principal of the
Refunded Bonds as the same becomes due to and including the Redemption Date; and (3)
redeem the principal of the Optional Bonds on the Redemption Date; and
WHEREAS, for such purposes, the Issuer has determined to deposit the proceeds from
the sale of the Series 2002C Bonds in the total amount of $7,786,315.40 with the Agent in
immediately available funds; and
WHEREAS, sufficient funds of such amounts so deposited shall be used to purchase
direct obligations of the United States of America listed on Exhibit A-1 of the Verification
Report attached hereto (the "Government Obligations") which will mature in principal amounts
and bear interest at such times so that sufficient funds will be available from such maturing
principal and interest amounts, together with the cash balance in the Escrow Account, to: (1) pay
interest on and principal of the Refunded Bonds as the same becomes due to and including the
Redemption Date; and (2) redeem the principal of the Optional Bonds on the Redemption Date;
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
hereinafter set forth, the parties hereto agree as follows:
-I-
DORSEY & WHITNEY LLP, ATTORNEYS, DES MOMS, IOWA
Ames/419370-27/Escrow Agr
1. There is hereby created and established with the Agent a special and irrevocable
escrow account designated the "City of Ames Series 1994 and 1995 Bond Escrow Account" (the
"Escrow Account") to be held in the custody of the Agent.
2. The Issuer represents, covenants and warrants that there will always be, on any
interest or principal payment date for the Refunded Bonds, sufficient principal amounts of and
interest income from the Government Obligations and cash in the Escrow Account to pay the
interest on and principal of the Refunded Bonds when due to and including the Redemption
Date, and that there will be sufficient principal amounts of and interest income from the
Government Obligations and cash in the Escrow Account to prepay the principal of the Optional
Bonds on the Redemption Date.
3. Concurrently with the execution of this Agreement, the Issuer herewith deposits
or causes to be deposited with the Agent for the benefit of the owners of the Refunded Bonds the
amounts set forth in the preamble hereof in immediately available funds, and the Agent hereby
acknowledges receipt of such funds. Such funds shall be disposed of as follows:
(a) $42,000 shall be used to pay expenses of issuance related to
the Series 2002C Bonds;
(b) $7,743,471 shall be used to purchase the Government
Obligations;
(c) $0.41 shall be held as an initial cash balance in the Escrow
Account; and
(d) $843.99.(excess proceeds) shall be remitted to the Issuer
for deposit into the Issuer's sinking fund for the Series
2002C Bonds and shall be applied to the payment of the
interest due on the Series 2002C Bonds on June 1, 2003.
4. Concurrently with the execution of this Agreement, the amount referred to in (b)
above shall be used to purchase the Government Obligations, such amount being the cost of the
Government Obligations. Except for the aforementioned amount referred to in (d) above to be
held in the Escrow Account as a cash balance, the Agent, immediately upon receipt thereof and
in no event later than 30 days from the date hereof, shall disburse the proceeds remaining, after
the purchase of the Government Obligations, in the respective amounts referred to in (a) and (c)
above for the payment of issuance costs and for deposit into the Issuer's sinking fund. The
issuance costs referred to above include the sum recited in paragraph 9 hereof.
5. The Agent agrees to collect all payments of principal of and interest on the
Government Obligations on behalf of the Issuer and, on each payment date for the Refunded
Bonds, shall disburse the same to the Issuer for the payment of interest on and principal of the
Refunded Bonds then due, to and including the Redemption Date; and, on the Redemption Date,
for the prepayment of principal of the Optional Bonds on the Redemption Date, and the
Refunded Bonds shall be canceled and rendered non-negotiable after such payment and
prepayment.
-2-
DORSEY & WHITNEY LLP, ATTORNEYS, DES MOINES, IOWA
Ames/419370-27/Escrow Agr
6. If at any time it shall appear to the Agent that the funds in the Escrow Account
allocable for such use hereunder will not be sufficient to make any payment due under the terms
of this Agreement as hereinbefore provided, the Agent shall immediately notify the Issuer. The
Issuer thereupon shall forthwith deposit in the Escrow Account, from legally available funds,
such additional funds as may be required to fully pay the amounts due and payable.
7. Within 30 days of the close of each fiscal year, commencing with the fiscal year
ending June 30, 2003, until termination of the Escrow Account, and within 60 days of
termination of the Escrow Account, the Agent shall submit to the Issuer a report on the Escrow
Account covering all investments held and all money received therein and all payments made
therefrom during the preceding fiscal year or portion thereof.
8. Not less than 60 days prior to the Redemption Date, the Agent agrees to send
notice of prepayment of the Optional Bonds to the registered owners of the Optional Bonds, as
shown by the records of the Issuer, not less than 30 and not more than 45 days prior to the
Redemption Date by certified mail, return receipt requested.
9. The owners of the Refunded Bonds from time to time outstanding shall have an
express lien on all funds and Government Obligations in the Escrow Account until used and
applied in accordance with this Agreement.
10. The Agent shall receive $500 as compensation for its services as Escrow Agent,
and the Agent expressly waives any lien upon or claim against the funds and investments in the
Escrow Account.
11. The parties further agree that third persons may rely upon the provisions of this
Agreement, including the owners of the Refunded Bonds outstanding from time to time, and the
purchasers of the Series 2002C Bonds, and this Agreement shall not be revocable if such
revocation should be to the prejudice of any third person.
12. In order to ensure continuing compliance with Section 148 of the Internal
Revenue Code, and present Internal Revenue Service Regulations promulgated thereunder, the
Agent agrees that it will not reinvest any cash received in payment of the principal of and interest
on the Government Obligations held in the Escrow Account. Said prohibition on reinvestment
shall continue unless and until an opinion is received from nationally recognized bond counsel
that reinvestments, as specified in said opinion, may be made in a manner consistent with said
Section 148 and then existing Regulations.
13. When payment or prepayment has been made in full for principal of and interest
on all of the Refunded Bonds, and all of the Refunded Bonds have been canceled as aforesaid,
any funds remaining in the Escrow Account shall be paid to the Issuer.
14. This Agreement shall terminate only at such time as payment or prepayment of
interest and redemption premium on and principal of the Refunded Bonds have been paid in full.
-3-
DORSEY & WHITNEY LLP, ATTORNEYS, DES MOINES, IOWA
Ames/419370-27/Escrow Agr
IN WITNESS WHEREOF, the undersigned have hereinafter executed this Agreement as
of the date first above written.
Attest:
X,
City Clerk
(Seal)
CITY OF AMES, IOWA
By
FIRST AMERICAN BANK
Urbandale, Iowa
By A lill"a2
(signature)
J.
(Name
I , C, e (
(Title)
-4-
DORSEY & WHITNEY LLP, ATTORNEYS, DES MOINES, IOWA
CITY OF AMES, IOWA
VERIFICATION REPORT'
OCTOBER 15,2002
INDEI)ENDE,N'I'AC[00NTANT`S VER}FICAIION REPORT
City nf&zncs
5l5Clark Avenue
Ames, Iowa
Dorsey & Whitney Lip
801 Grand, Suite 3900
Des Moines, Iowa
EvenscuDodge, Inc.
65OThird Avenue South, Suite 1800
Minneapolis, Minnesota
First Amcduuu0unk
7U3lDouglas Avenue
Orbanda}e,1ovva
International
pursuant tothe request ofEvuimcnDod��Inc. Aho"Piouno�|&dviaor,)onbuba|fuftbcCity ofn� �cu,
|owu (the "Issuer"), we have performed ceduin procedures, as discussed bu|cxv, in connuc1inn with 1hc
]aaucr`m proposed iusoancc of the following two series of' bonds, both to be dated October 15, 2002
(collectively referred to as the ^'2002 Bonds"):
� $5,885,000Genuru Ob\iguionCorporate Purpose Bonds. Series 2002B(the =20O28800ds");and
� $7^588,O0OGeneral O6\igotioo0c[uodiu�BooJa,Series 20O2CU6c^`28U2(�8onds``).
Proceeds 6nmthc 2002C Bonds will be used to advance refund three ofthe Issuer's uuidundingGeneral
Ob|i-utiou Corporate Purpose Bonds (no\|uciivc!v referred to as the "Refunded Bonds"), as ouozmurized
~ Series 1994B hhc"^Kefondcd 1994Bonda`l
0 Series 1995A (the "'Refunded 1995A Bonds")
0 Series 1995B (the "Refunded 1995B Bonds")
Optional
To Be Refunded Kcdecoytoo
Amount Maturities Date and Price
06/01/03 06/01/03
through at
$ 660,000 06/01/06 100.00
06/01/03 06/01/03
through at
� 5,030,000 06/01/10 100.00
06/01/03 06/01/03
through at
S 1,750,000 06/01/07 100.00
McG(adrg'"& PvUco, LLT
iumoindcpcndummm6er
Doo ofK8m |o/cmauiuuuL
anuMGUauiouu[imcpoudeu�
City of Ames, Iowa
Dorsey & Whitney LIT
Evensen Dodge, Inc.
First American Bank
October 15, 2002
Page 2
The procedures were performed solely to assist the addressees of this report in evaluating the
mathematical accuracy of certain schedules prepared by the l,inancial Advisor which indicate that:
there will be sufficient funds available in an escrow account to be established on October 15, 2002 to
pay the remaining debt service payments related to the Refunded Bonds (the "Escrow
Requirements"), assuming those Refunded Bonds originally scheduled to mature on or after June 1,
2004 will be redeemed at par on June 1, 2003; and
the yield on the United States Treasury Securities --State and Local Government Series (the
"SLGS") to be purchased on October 15, 2002 with 2002C Bond proceeds is less than the yield on
the 2002 Bonds.
The procedures we performed are summarized below.
We independently calculated the future cash receipts from the SLGS (Exhibit A-1), compared the
future cash receipts to the Financial Advisor's schedules, arid found the future cash receipts to be in
agreement.
We independently calculated the Escrow Requirements related to the Refunded Bonds using
information from the Resolutions for the Refunded Bonds, compared the Escrow Requirements to
the Financial Advisor's schedules, and found the Escrow Requirements to be in agreement.
Z11
Using the results of our independent calculations described in procedures I and 2 above and using an
assumed initial cash deposit of $0.41 (forty-one cents) to the escrow account on October 15, 2002,
we prepared an escrow account cash flow schedule (attached hereto as Exhibit A). The resulting cash
flow schedule indicates that there will be sufficient funds available in the escrow account to pay the
E'scrow 12equirernents on a timely basis.
4. We compared the rate table date (i.e., September 23, 2002) set forth on the SLGS Confirmation of
Subscription Receipt to Form PD 4262 Department of the Treasury --Bureau of the Public Debt—
SLGS Table for Use on September 23, 2002 (the "SLGS Rate 'Fable"), and found the dates to be the
same.
5. We compared the interest rate for each SLGS to the SLGS Rate Table and found each interest rate to
be equal to the applicable maximum allowable interest rate for use on September 23, 2002.
6. We compared the terms (i.e., the principal amounts, interest rates, issue dates, and maturity dates) of
the SLGS to be acquired on October 15, 2002, as summarized herein, to the final SLGS subscription
forms provided by the Financial Advisor; we found the terms to be in agreement.
7. We compared pertinent terms of the Refunded Bonds (i.e., debt service payment dates, annual
maturity amounts, interest rates, and optional redemption provisions), as summarized on Exhibits
A-2 through A-4, to the Resolutions for the Refunded Bonds provided by the Financial Advisor; we
found the tern -is to be in agreement.
City of Ames, Iowa
Dorsey & Whitney LLP
Evensen Dodge, Inc.
First American Bank
October 15, 2002
Page 3
We independently calculated the yield on the SLGS and the yield on the 2002 Bonds, assuming a
settlement date of October 15, 2002. The term "yield," as Lised herein, means that yield which, when
used in computing the present value of' all payments of principal and interest on an obligation
compounded semiannually using a 30/360-day year basis, produces an amount equal to: in the case
of the SLGS, the purchase price of the SLGS; and, in the case of the 2002 Bonds, the issue price to
the public as represented by the Financial Advisor. The results of our yield calculations, which are
listed below, were compared to the yield calculations provided by the Financial Advisor; we found
the yields to be in agreement.
Yield Exhibit
0 Yield on SLGS 1.5776058'Yo A-]
* Yield on 2002 Bonds 2.8067607'Vo B
Based on performing the agreed -upon procedures, we have found that those schedules provided by the
Financial Advisor, when compared to those schedules prepared by us (attached hereto as Exhibits), are
arithmetically accurate and reflect, based on the assumptions set forth herein, that:
there will be sufficient funds available in the escrow account to pay the escrow Requirements; and
the yield on the SLGS is less than the yield on the 2002 Bonds.
This engagement was performed in accordance with standards established by the American Institute of
Certified Public Accountants (the "AICPA"). The sufficiency of these procedures is solely the
responsibility of the specified users of the report. We make no representation regarding the sufficiency of
the procedures summarized above, either for the purpose for which this report has been requested or for
any other purpose.
We were not engaged to, and did not, perform an examination, the objective of which would be the
expression of an opinion on the anticipated escrow account cash sufficiency or yield calculation,.
Accordingly, in accordance with standards for attestation services established by the A1CPA, we cannot
express such an opinion. Had we performed an examination or perfor-nied additional procedures, other
matters might have come to our attention that would have been reported to you.
The results of'our independent calculations with respect to the proposed transactions are summarized in
the accompanying exhibits. The original computations, along with related characteristics and assumptions
contained herein, were provided by the Financial Advisor on behalf of the Issuer. We relied solely on this
information and these assumptions and limited our work to performing those procedures set forth above.
City of Ames, Iowa
Dorsey & Whitney LIT
Evensen Dodge, Inc.
I"irst American Bank
October 15, 2002
Page 4
This report is issued solely for the information of, and assistance to, the addressees of this report and is
not to be quoted or referred to in any document, except for the Official Statement and required closing
transaction documents. Additionally, this report should not be used by those who have not agreed to the
procedures and taken responsibility for the sufficiency of the procedures for their purposes. Under the
terms Of our engagement, we have no obligation to update this report because of events or transactions
occurring subsequent to the date of this report.
lc��lu�, o'h�F�, «P
Minneapolis, Minnesota
October 15, 2002
EX191BUTA
CITY OF AMES, IOWA
ESCROW ACCOUNT �ASBFLOW
Escrow
Requirements
Total Cash Related to
Receipts From RefundodBondy
SL<3S (Exhibits /\-2 Cash
D(Exhibit Balance
Initial cash deposit on October 15, 2002 $ - $ - $
12/01/02 189,372.93 189,37250 0.84
06/01/83 7.629.37168 7�629.372.50 0.02
EXHIBITA-1
CITY OF AMES, IOWA
CASH RECEIPTS FROM AND YIELD ON SLGS
Present Value on
October 15,
'Total Cash
2002 tJsin-
Receipt
Interest
Receipts From
a Yield of'
Date 'Fvpe
Rate
Principal
Interest
SLGS
1.5776058%
12/01/02 Cert.
1.59%
188,986 $
386.93
S 189,372.93
188,993.07
06/01/03 Cert.
1.58%
7.554,485
74,886.68
7,629,3 71.68
7,554,477.93
7.743.471 $
75.273,61
S 7,818,744.6 1
7,743,471.00
Purchase price of SLGS
S 7,743,471.00
Flic suns of the present values Of future cash receipts front the S1,GS, on October 15, 2002 using a yield of
1.5776058 percent, is equal to the purchase price ofthe S1.,GS; therefore, the yield on the Sl.,GS is equal to
1.5776058 percent.
EXHIRITA-2
CITY OF AMES, IOWA
ESCROW REQUIREMENTS RELATED TO REFUNDED 1994 BONDS
Escrow
Requirements
Related to
Refunded
1994
Date Principal Interest Bonds
12/01/02 17,820.00 17,820.00
06/01/03
660,000 (1) 17,820.00 677,820.00
660,000 4 35,640.00 695,640.00
(I) Consists of the following bonds to be paid or optionally redeemed at par on June 1., 2003:
Maturity
Date Interest
(June 1)
Principal
Rate
2003
165,000
5.30%
2004
165,000
5.40'i'o
2005
165,000
5.40%
2006
165,000
5.50%
S 660,000
EXBIB/T,4-3
CITY OF AMES, IOWA
ESCROW REQUIREMENTS RELATED TO REF0NDEQ1995A BANDS
Escrow
Kcqubxnuus
Related to
Refunded
l99jA
Date Principal Bonds
060l03
03 (1) 13077750 5,160,777.50
(1) Consists of the followino bonds to be paid or optionally redeemed at par on JL111C 1, 2003:
Maturity
Date
(June I)
Principal
Interrst
Rate
2004
720,000
5.10%
2085
720,000
520Y6
2086
720,000
52596
2007
720,800
525Y6
2008
480,000
5.25%
2809
475,000
525%
2010
475`000
525%
EXHIB]TA-4
CITY OF AMES, IOWA
ESCROW REQUIREMENTS RELATED TO I2EFLJNDED 1995B 13ONDS
Escrow
Requirements
Related to
Refunded
1995B
Date Principal Interest Bonds
12/01/02 S - $ 40,775.00 S 40,775.00
06/01/03 1,750,000 (1) 40,775.00 1,790,775.00
S 1,750,000 S 81,550.00 S 1,831,550.00
(I ) Consists of the following bonds to be paid or optionally redeemed at par oil June 1, 200' ):
Z�'
Maturity
Date
Interest
(June 1)
Principal
Rate
2003
350,000
4.60%
2004
350,000
4.60%
2005
350,000
4.600//`
2006
350,000
4.709/0
2007
350,000
4.80%
S 1,750,000
F.XIIIBITA-5
CITY OF AMES, IOWA
ESTIMATED SOURCES AND USES OF FUNDS (2002C BONDS)
Sources:
Principal amount of 2002C Bonds
Net original issue premium
LJses-.
Purchase price of SLGS
Initial cash deposit to escrow account
Underwriter's discount
Issuance costs
Contingency
$ 7,580,000.00
225,265.40
$ 7,805,265.40
7,743.,47 1.00
0.41
18,950.00
42,000.00
843.99
$ 7.805.265.40
f,XHlBl7B
CITY OF AMLS, IOWA
YIELD ON 2882BON0S
Issue priceof20O2Bonds for yield
calculation purposes:
Principal
Original issue premium
8um ofprusootmJucy of[uturc debt service
payments, unOctober l5,2002using
uyield of2.BU67607percent, on:
-2O02BBonds (Exhibit B-l)
'2002CBonds (Exhibit B-2)
2002B 2002C
Bonds Bonds Total
$ 5,085,000.00 $ 7,580,000-00 $ 13,465,000,00
555
� 6,009,761.88
7.702.693.67
The oum ofthe present values ofdebt service payments tobe made onthe 2002 Bonds, on October 15,2002
using ayield of2.8067607percent, isoqunl1otboixsuopdocof|hc2002Bondofbryicldua\cu|utionpuqposcs;
o
f.X71-IB/78-
CITY OF AME8,;8WA
PRESENT VALUE AF0EBTSEIZ9KCEPAYMENTS RELATED 1[{}20N2B BONDS
Debt
Service
Payment
Date
Principal
1ntcroo1
Rate
Yield
Interest
Total Debt
Service
Present Value on
October |5.
2002Osin-
7
aYi6d of
2 8O67687'Vo
0601/04
430,080
2.25%
1.550Y4
81,503.75
511,503J5
488,815.30
12/01/04
-
-
-
76,66625
76.66625
72,251�65
0601/85
435,000
2j0"/o
1.880Y6
76,66625
511,66625
475,52995
12/0105
-
71,228J5
71.228.75
6I282.08
8601/06
445,000
2.50%
2.130%
71,228.75
516,228J5
466,582.48
1201/06
-
-
-
65,66625
65.66625
58.52966
060107
455.000
2.7596
2.440%
65,66625
520,666.25
457'657.73
120107
-
-
59/410.00
59,418.00
51,497.78
060108
470,000
3.00%
2,7400/0
59,410.00
529410.08
452,552.17
12/01/08
52,360.00
52,360.00
44,139]3
060109
485,000
3.00%
2,970%
52,360.00
537.360.00
446,721.63
120109
-
'
-
45,085.00
45,085.00
36,961.64
0601/10
500,800
3.15Y6
3�160%
45,085.00
545.085.00
448,687.78
1201/10
37,210.00
37,210.00
29,667.03
8601/11
515,008
32596
3250%
37210.00
552210.00
4]4,176.]6
12/01/11
-
-
-
28,84125
28.84125
22,362.66
0601/12
85,808
3.30%
3.3701)/o
28,84125
563^84125
431,13561
1201/12
-
-
20,013J5
20,013.75
15,091.52
0601/13
555.008
3.45Y6
3.5201)/o
20,013.75
575,013.75
427,592.83
1201/13
-
'
-
18440.00
10,440.00
7,655.97
EXHIBIT B-2
CITY OF AMES,DnWA
PRESENT VALUE OF DEBT SERVICE PAYMENTS RELATEBTO2O02CBONDS
Cw61
Service
Payment
Date
Principal
Interest
Rate
Yield
Interest
Tom| Debt
Service
Present VaJucm
October |5,
20O2Dsin�
uYic|d of
28067687Y6
12/0103
-
-
101,050.00
101,650M
98J04.44
060104
1,308,000
3,00%
1.57%
101,650.00
1/401,650.00
1,339,477.89
120104
-
-
82,150.00
82,150.00
77,41963
060105
1,205,080
IOOY',
1.88%
82]50.00
1,34I150.00
1,252])07.07
120105
'
-
63,175.80
63.175.08
57,900.71
06/ l/06
1,248,800
3.50%
2]4%
63,17I00
1,383,175.00
1,177,847.27
120106
-
-
41,475.00
41,475.00
36.967.51
86/ )07
1,060/00
3.50%
2.45%
41,475.00
1.101/475.00
968,179.80
120107
-
-
22,925.08
22,925.00
19,871.86
860108
450/00
3.500/o
2750/6
22`925.80
472,925.00
404,267,45
120108
-
-
-
15,050.08
15,050.00
12,687.85
060109
435,000
3.50%
2.97%
15,050.00
450,058.00
374,138.51
1201/09
-
-
-
7,437.50
7/437.50
6,097.42
0601/10
425,000
3.50%
3,17%
743750
432,437.50
349615.05